Judge approves settlement in JPMorgan insurance case

Michael Virtanen, Associated Press

February 28, 2014Updated: February 28, 2014 8:35pm

A federal judge has approved a settlement of a class-action lawsuit against JPMorgan Chase for its force-placed insurance practices, an agreement that could pay more than $300 million to about 750,000 mortgage borrowers.

The national settlement prohibits the bank for six years from getting commissions, kickbacks or reinsurance from the insurance, which it obtains when a homeowner's policy lapses.

Under U.S. District Judge Federico Moreno's order in Miami, class members will have to file claim forms to recover 12.5 percent of the net premiums they were charged between Jan. 1, 2008, and Oct. 4, 2013. Moreno also barred JPMorgan Chase and Assurant and its insurance subsidiaries "from inflating premiums" for six years.

Premiums for force-placed insurance, which were deducted from a homeowner's escrow account or added to the mortgage loan balance, were often much higher than the homeowners' initial premiums. Many of those covered by the lawsuit lost their homes to foreclosure.

The lawsuit estimated the value of injunctive relief from the bank changing its practices at $690 million.

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"During those six years, Chase will accept no financial interest in the placement of force-placed hazard insurance policies outside of the premium itself and the protection of the policy," Moreno wrote.

Other banks?

Similar settlements are expected to follow in lawsuits against some other major banks.

Assurant spokesman Robert Byrd said lender-placed insurance is important, providing backup coverage if a homeowner's policy has lapsed.

"These policies are issued in accordance with the terms of the mortgage and applicable regulations, and we have acknowledged no wrongdoing in this case. We believe, however, it is in the best interests of the company to resolve this matter at this time," he said.

Plaintiffs' attorney Adam Moskowitz said they were grateful to Moreno for drafting an extensive order. "We're also thankful to Chase, who decided to do what is right for their customers."